A Production Adjustment Method that Treats Both Backlog and Inventory Equally to Respond to Fluctuations in Product Demand

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  • 需要量の揺らぎ変動に対処するために受注残を在庫量と対等に扱う生産調整法
  • ジュヨウリョウ ノ ユラギ ヘンドウ ニ タイショ スル タメニ ジュチュウザン オ ザイコリョウ ト タイトウ ニ アツカウ セイサン チョウセイホウ

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Abstract

This paper addresses information sharing for the purpose of adjusting the product flow with the information flow between a manufacturing company and a sales company in a supply chain. In other words, if demand fluctuates, the issue is what data should be shared by a manufacturing company with a sales company to realize efficient production-sales activities. Supposing a group company continues to produce and sell a product under a pull-type system, and sets the production rate in a unit period at a value fixed according to the estimates of demand. This will inevitably cause overproduction or insufficient production because demand fluctuates, following a probability distribution. Without any production adjustments, when demand fluctuates, either the product will be out-of-stock or the company will be forced to pile up excessive inventory of the product due to overproduction. The inventory or the backlog may increase infinitely over a long period of time. In this paper, a method for making production adjustments to minimize the inventory, as well as the backlog, is derived from the following empirical prescription: the production rate in a unit period should be the estimated demand for the period corrected by the inventory and the backlog piled up in the previous unit periods. This empirical prescription provides the following simple method of applying production adjustments: the production rate in a unit period should be exactly the same as the demand quantity in the previous unit period. This production adjustment method, obtained by mathematical analyses, is shown here. This paper also presents some examples of time-series changes of inventory and backlog data through simulations. One finding is that by treating both inventory and backlog equally, this proposed adjustment method not only decreases the inventory, but also decreases the backlog.

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